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One fifth of all spending now online

Figure to reach 50 per cent in five years, says Capgemini

Around £26.5bn was spent online in the UK in first half of 2008, equivalent
to 17p out of every £1.

The latest IMRG Capgemini e-Retail Sales Index said that, despite the credit
crunch, online shopping is up 38 per cent on the £19.2bn spent in the first half
of 2007.

The report also foresees strong online growth for the rest of 2008, driven
primarily by rising fuel costs, falling disposable incomes, a desire to achieve
sustainability in the supply chain and smarter consumer shopping habits.

E-commerce in 2008 has followed similar seasonal trends to previous years.
Growth in online sales fell by 16.5 per cent in January, picked up in the spring
and declined again towards the summer.

However, the negative five per cent dip in growth for June is significantly
more pronounced than in 2007, suggesting that online spending is not entirely
impervious to the current economic woes.

"Online retail is not immune to the credit crunch, but it is showing greater
resilience than the high street," said Mike Petevinos, head of retail consulting
at Capgemini UK.

"The online channel continues to grow its share of retail spend thanks to the
traditional drivers of convenience and choice, but these drivers appear to be
magnified by the current economic environment.

"Convenience has a sharper edge in a world of soaring fuel prices, and the
ability to research and make more informed choices in a time of heightened price
sensitivity is a key advantage of the online channel."

Scrutinising the figures more closely reveals that consumers are buying
everyday items at discount retailers while adding a touch of luxury with select
items from high-end retail outlets.

"Online shopping growth continues to out-perform the high street, as tight
budgets and poor weather keep people at home where they can shop online for
bargains," said James Roper, chief executive and founder of IMRG.

Clothing and footwear sales were the biggest losers in physical stores in
June, despite heavy and widespread discounting.

Online, however, they were big winners. Clothing sales rose 32 per cent,
lingerie 37 per cent and footwear 38 per cent.

Capgemini now believes that between 30 and 50 per cent of all retail will be
online in the next five years as sustainability issues drive growth.

"As online reaches 20 per cent of all retail sales, retailers experience a
tipping point which forces them to seriously rethink the future viability of
their business model," explained Petevinos.

"We have seen this happen for books, music, DVDs and electricals, and more
categories are sure to follow as the industry as a whole reaches this tipping
point in 2008."